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To: TraderTerry who wrote (74163)	8/16/1999 9:21:00 PM
From: GST	Read Replies (1) \| Respond to of 164684

Terry re: what to short (no encouragement) -- I took out some contracts on Gateway today -- they have been on a roll and hence have a good perch to fall from, they face competition and lower prices for their products and component prices are rising and in some cases are in short supply -- see the following for an example: Monday August 16, 8:08 pm Eastern Time Notebook shortage may sap PC maker profits-analyst By Eric Auchard NEW YORK, Aug 16 (Reuters) - Financial results for notebook computer makers could suffer because of an industry-wide shortage of key components used to make display screens, an analyst with brokerage ABN AMRO warned on Monday. ABN AMRO analyst Jonathan Ross said International Business Machines Corp. (NYSE:IBM - news) appeared to be affected by a shortage of liquid crystal display (LCD) chips and thus can only meet 70 percent of its notebook output goal for August. The analyst said he was hearing of the shortfall from unnamed ''reliable sources.'' He said other major notebook PC makers that depend on Hitachi Ltd. for such LCD driver chips ''may be experiencing similar problems.'' He also estimated that notebook computers represent roughly 23 percent of Dell Computer Corp.'s (Nasdaq:DELL - news) sales turnover, 10 to 15 percent for Compaq Computer Corp. (NYSE:CPQ - news) and around 10 percent for Gateway Inc. (NYSE:GTW - news) ''Such adverse conditions should have a moderately negative earnings impact on notebook suppliers like Dell and Compaq,'' Ross said. Dell spokesman T.R. Reid said he was not aware of the analyst's comments but noted that the notebook display shortage was an on-going, industry-wide problem which was not expected to disappear before the end of 1999. He declined to comment further ahead of Dell's quarterly report due out Tuesday. A Compaq spokesman said the company had recently refreshed its commercial notebook product line with a range of new products ranging from lightweight ultraportables to heavy-duty ''desktop replacement'' notebooks. ''We don't know at this time of any significant supply issues,'' the Compaq spokesman said. IBM spokesman Mike Corrado said he was not aware of any shortage and that IBM had multiple suppliers of LCD screens to alleviate any possible shortage from a single supplier. Analysts believe IBM notebooks, including its ThinkPad line, contribute a disproportionate percentage of the profits for IBM's overall PC business, which is struggling to return to profitability. Hitachi sells its chips to two Taiwanese companies, Quanta Computer Inc. and Inventec Corp. , Ross said. Quanta supplies notebook screens to Dell and Gateway, as well as Siemens AG (quote from Yahoo! UK & Ireland: SIEG.F), Apple Computer Inc. (Nasdaq:AAPL - news), while Inventec is a supplier of screens to Compaq. A Hitachi America spokesman said he could not immediately comment and referred calls to a spokesman for Hitachi Semicondutor (USA). He was not available to comment. ''The evidence suggests that while IBM may be bearing the brunt of the shortages, it is an industry-wide problem,'' Ross wrote in a note to his clients on Monday. ''While tightness is a good thing, these levels of shortages are likely to have a small but quantifiable negative impact on PC companies' earnings, at least in August and possibly into September,'' he said. Despite the analyst's remarks, shares of PC makers mostly posted gains for the day. IBM stock rose $3-15/16 to $127-7/16, Gateway climbed $2-7/8 to $84-5/8 and Compaq rose 9/16 to $23-5/8, all on the New York Stock Exchange. Apple added 7/16 to end the day at $60-1/2 in Nasdaq stock market action. On the Nasdaq, Dell closed at $41-7/16, unchanged on the day. Dell reports results for its second quarter ended in July after the close of regular session trading on Tuesday. The Wall Street consensus is for Dell to earn 17 cents per share, according to brokers surveyed by First Call/Thomson Financial.

To: TraderTerry who wrote (74163)	8/16/1999 9:23:00 PM
From: Glenn D. Rudolph	Respond to of 164684

After Outage, MCI Says It Will Reimburse Frame-Relay Customers AUG 16,1999 NEW YORK -(Dow Jones)- MCI WorldCom Inc., which has experienced problems with a key data network since Aug. 5, will reimburse customers with 20 days of free service, Chief Executive Bernie Ebbers said Monday. After a 24-hour shutdown that ended Sunday, MCI (WCOM) said it had stabilized the network and restored service. Ebbers said he had "no confirmation that anyone intends to leave the service as a result of the problem." The high-speed "frame relay" network is used by about 3,000 customers. The network disruption will have no impact on the company's third-quarter and full-year earnings, Ebbers said. The network outage, which lasted from about noon on Saturday until Sunday afternoon, gave MCI WorldCom engineers time to remove a new version of software from Lucent Technologies Inc. that is believed to have contributed to problems in its frame-relay network, which transmits data between computers at very high speeds. Buoyed by the Internet, telephone companies increasingly are betting on data networks to fuel growth. But MCI WorldCom's experience shows that these networks also lack the reliability of voice networks - even as corporate customers become increasingly dependent on data networks for day-to-day operations. While many of the largest companies have backup systems in the event of such network problems, the MCI WorldCom shutdown nonetheless caused a smattering of problems throughout the weekend. America Online Inc., which uses the data network to transmit some of its Internet traffic, said about 10% of its customers had to use alternate access numbers used to dial up Internet connections. For customers in some small towns, AOL set up toll-free access numbers for members to receive Internet connections. The network problems riled some big customers such as the Chicago Board of Trade. The network problems shut down CBOT's electronic-trading system for more than 60% of its usual operating hours since Aug. 5. In a letter to MCI WorldCom, Thomas R. Donovan, president and chief executive officer of the exchange, deemed the outages "unacceptable." CBOT is considering, among other options, severing the exchange's ties with MCI WorldCom. The problem is reminiscent of a similar outage in AT&T Corp.'s frame-relay network last April. That breakdown affected thousands of corporate customers nationwide. AT&T blamed the outage on software flaws that occurred when the carrier attempted to upgrade one of its switches. But, the AT&T meltdown was over in about a day, while some MCI WorldCom customers endured a roller-coaster experience of on-again, off-again service for more than a week. AT&T won kudos from observers for its quick handling of the breakdown as its chief executive, C. Michael Armstrong, made personal calls to some of its biggest customers. MCI WorldCom's President and CEO Bernard J. Ebbers took the personal approach too, making calls to customers. MCI is "still investigating" the software issues behind the disrupted network, Ebbers said. In the interim, the company has gone back to using the network software it had before it attempted the upgrade. Ebbers said the older software can support the company's current rate of growth in its data networking business "for at least 18 months." That is "plenty of time" to consider alternatives to boosting network capacity, he said. Copyright (c) 1999 Dow Jones & Company, Inc. All Rights Reserved.